The ancient relationship between experience and money….

Thursday, 28th May 2020

The ancient relationship between experience and money….

Early 2020 is on record as the most volatile period in the markets since the Great Depression….

The CBOE Volatility Index sits at 27.6. That’s well short of a peak fear reading of 82.69 recorded on 16th March….

…. but still ahead of a year-to-date average of 16.0….

…. and a long way above the low readings (signaling confidence and/or complacency) seen for long periods during the bull market that followed the 08/09 global financial crisis….

In other words, volatility has subsided. But it hasn’t gone away. A bit like the COVID-19 virus….

  • Recession ahead….

Something else that hasn’t gone away is worrying data – some of it the worst in living memory….

US jobless claims are at almost 40 million. That’s a fifth of the labour force in the world’s biggest economy sitting idle and watching daytime TV….

Output has slumped worldwide. World trade volumes have shrunk ‘precipitously’. Every metric you might quote is on the floor. Every sector in every economy has contracted….

Things are improving as global lockdowns relax – but only in terms of shrinking at slower pace. The world faces a post COVID-19 of steep and significant proportions….… Click here to read more

They thought it was all over – but the worst was yet to come….

Thursday, 14th May 2020

They thought it was all over – but the worst was yet to come….

Thanks to the CBOE Volatility Index (VIX) we know exactly when investor fears about the global pandemic peaked ….

It was Monday 16th March. The VIX reading climbed to 82.69….

Some people call VIX the Fear Index. Others call it the Complacency Index. In truth, it’s both….

It measures how volatile investors expect the S&P 500 to be across 30-days….

A high measurement says investors are fearful. A low reading says tomorrow will be just like today….

‘Fear’ doesn’t quite capture a VIX reading of 82.69. Abject terror is more accurate….

The VIX reading had never been so high. Not once in 30-years….

  • A funny thing….

The funny thing is that on Friday 10th March, the US stock market enjoyed its best day since 2008….

The S&P 500 closed 9% up. The Dow Jones was up 9.36%. That represented a gain of 1,985 points – the biggest ever….

But, while champagne corks popped on Wall Street, European investors wept into their ale….

Earlier that day, European markets closed after their worst week since 2008….

The FTSE 100 had shed 17% of its value – £275 billion wiped from the boards….… Click here to read more